2009-04-09

China Wins Economic "War" Game

The Pentagon sponsored a "war" game to help predict the effects of various economic situations, including economic warfare—direct actions by governments targeted towards other nations. China "won" the game because the U.S. and Russia weakened each other with their confrontations. However, given that the concern is national security, it is possible that China lost as well, since its own economy was probably damaged.

One paragraph was very interesting:
And second, Bracken says, the event left him questioning one prevailing assumption about economic warfare, that the Chinese would never dump dollars on the global market to attack the US economy because it would harm their own holdings at the same time. Bracken said the Chinese have a middle option between dumping and holding US dollars – they could sell dollars in increments, ratcheting up economic uncertainty in the United States without wiping out their own savings. “There’s a graduated spectrum of options here,” Bracken said.
I posted links to a series of articles in the Asia Times by W Joseph Stroupe that argued China may be doing exactly that, right now.

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